PAM to renew oil site agreement

Ulaanbaatar /MONTSAME/ The cabinet at its session on May 4 allowed G.Olziiburen, the chairman of the Petroleum Authority of Mongolia (PAM), to gradually transfer the rights and duties of Central Asian Petroleum Corporation LLC before its product-sharing agreement with the PAM at oil exploration sites -“Bogd-IV” and “Ongi-V”, to BG Mongolia Holdings Limited Company. The product-sharing agreement was approved by the Cabinet in July of 2009. Since then, the company has made investments of 19 million USD , of which 17 million was dedicated to the explorations and two million –for payments to the Government according to the agreement. Although, additional explorations and researches were required on the sites, it has become very difficult to draw more investments, due to a decline in the world economy. As the Law on Petroleum was renewed in 2014, the Government concluded a Farm Out agreement with BG Group of the UK, as a result of series of discussions with interested investors and oil giants including the BG Group, Chevron and Anadarko. The agreement sets out that an investment of 28 million USD will be made, of which 13.6 million in 2015 and 13.0 million in 2016 will be dedicated to the explorations and 1.4 million USD will be paid to the Government. BG Mongolia Holdings Limited will bear 78 percent of responsibilities before the previous product-sharing agreement, and Central Asian Petroleum Corporation LLC–22 percent. The latter will hold full responsibility to conduct unconventional exploration and operations at the sites.